Author: Published: May 29, 2019 Utility Dive

Dive Brief:

  • PJM Interconnection announced on Tuesday that Andy Ott, who has served the grid operator for 22 years, will retire as CEO and president on June 30.
  • PJM also announced five executive appointments effective July 3, focusing on system reliability, competitive wholesale electricity markets and infrastructure planning. Ott decided on the promotions about a month ago and had received approval from the grid operator’s Board of Managers, according to PJM spokesperson Susan Buehler.
  • Board Member Susan Riley was tapped to serve as interim CEO beginning July 1. Ott agreed to serve as a board adviser through the end of the year as a special committee searches for a new CEO.

Dive Insight:

Ott is leaving the nation’s largest wholesale electricity market at a time of upheaval and unprecedented change in its operations.

He has led a number of initiatives at the regional transmission operator (RTO), from capacity market reform to reserve pricing reform in PJM’s energy market.

PJM’s fuel mix is almost unrecognizable now from when Ott started in 1996. The region also boasts the largest penetration of demand response resources in the world and an increasingly reliable fleet that is “performing at a reduced forced outage rate” as older generators are taken offline and retire, Ott said earlier this year.

Ott “became retirement eligible a year ago and decided this was the right time for him,” Buehler told Utility Dive via email.

Ott’s exit takes place ahead of a number of deadlines for the RTO, including its August capacity market auction. Ott announced in April that the auctionwill not be delayed, even though the Federal Energy Regulatory Commission (FERC) has not approved new capacity market rules for PJM.

FERC invalidated PJM’s existing market rules in 2018, which led the grid operator to its current impasse with federal regulators.

PJM proposed last October to remove resource subsidies from the capacity market and set a strict price floor, or Minimum Offer Price Rule, for unsubsidized resources. Under the proposal, generators with subsidies would operate outside the market.

PJM deals with a large mix of stakeholders that have continuously butted heads over the need for subsidies and the grid operator’s various responses to FERC orders, including the energy storage-related Order 841. For 841 compliance, Ott said earlier this month that the RTO will not be lowering its 10-hour discharge requirement, which clean energy advocates have deemed prohibitive of storage resource participation within PJM’s capacity market.

Ott’s retirement is the second big executive change this year at the RTO, following the exit of CFO Suzanne Daugherty in the wake of criticisms about the grid operator’s response to GreenHat Energy’s default on financial transmission rights.

PJM released an independent review of the incident in March, concluding the RTO’s personnel were “naive” about the trading company’s assurances of future revenue and credit-worth. Ott laid out a plan to better address credit risks, including process improvements using outside assessments, the establishment of a Chief Risk Officer and market rule revisions.

C-suite changes

While the grid operator’s Board of Managers searches for a new CEO, Riley will take the reins as some final changes made by Ott come into effect.

Ott had proposed five promotions which “just happened to be announced yesterday,” according to Buehler.

“Each of these promotions helps ensure we continue to be an electric industry leader in areas that are critical for our members, stakeholders and the 65 million people in the region served by PJM,” Ott said in a statement.

VP of Operations, Michael Bryson, was appointed senior VP of Operations.

Frederick “Stu” Bresler III, who now serves as senior VP of Operations and Markets, was named senior VP of Markets and Planning.

Steven Herling, the current VP of System Planning, will become an executive consultant focused on strategic system planning projects.

Two program directors were also promoted to PJM’s executive team. Kenneth Seiler, formerly executive director of System Planning, will remain in the division as VP of Planning, and Adam Keech, formerly executive director of Market Operations, will oversee all wholesale markets operated by PJM as VP of Markets. Both positions report to Bresler.